IRS to Increase Enforcement Personnel (and Audit Rate)

IRS to Increase Enforcement Personnel (and Audit Rate)

July 11, 2016

By Gary Peck, CTRP

The IRS has reported that it plans to hire an additional 600 to 700 more enforcement employees in order to increase its audit and collection rates.

The Commissioner of the IRS stated that with over $900 million in budget cuts to the IRS since 2010, there have been unmet needs across the IRS. With recent increased resources to hire, he indicated that previous priorities were to add more staff in the areas of taxpayer service, identity theft and cybersecurity.

The IRS has now determined halfway through its fiscal year that it has enough resources to hire between 600 and 700 additional new employees in its enforcement areas to increase its audit rate. The Commissioner noted that the decision to hire more enforcement personnel is based on several factors, including attrition and replacement of retired employees. He stated that the planned hiring will be the IRS’s first significant enforcement hiring in more than five years. The Commissioner further indicated that although the 600 to 700 new enforcement hires will not replace all of those that have left, it will help fill key gaps in the IRS’s enforcement division.

What does this mean to you? As in all matters tax, the answer is “It Depends!” A return’s specific chance of being audited depends on many factors. Level of income, complexity of tax return, how ‘aggressive’ a tax return is and how many ‘red flags’ it may set off in the IRS’s algorithmic computer system (as well as bad-luck!) are all taken into account. One thing is certain, the chances of being audited will increase as the additional enforcement personnel come online.

Now is the time to tighten up on your recordkeeping and do some tax planning. Help yourself NOW to get a better result next March! Contact your YMM Advisor today.